I have a friend who received shmita from a Modern Orthodox yeshiva that elevates Ahavat Yisroel as its primary value and we used to clash over this idea. I no longer engage him over this issue since he is set in his haskafa and it is not productive any longer to debate it, but the point I tried to convince him of was that we are taught that ignoring a fellow Jew’s transgression is equated to the prohibition of standing idly by your brother’s blood, and taking on the sin to ourselves.
If the acceptance of another Jew’s incorrect behavior is so complete that a message is telegraphed to them that there is nothing wrong with what they are doing, I do not see this as an exercise of Ahavat Yisroel, but neglect for which we will be called to account.
Showing love for a fellow Jew (at least in my opinion) is trying to bring them closer to Torah – not making them feel comfortable with their growing distancing from it.